Monthly Market Update and Trends: August 2024
Welcome
back to the August 2024 Auckland Market and Situational Update.
Prefer to watch the Video: https://youtu.be/G__bsBF0q_w
Let’s
start with the Olympics, after a slow start in the medal count, New Zealand, at
the end of Day 9, is batting above its size again.
With
7 medals, consisting of 2 gold, 4 silver and a bronze we are in 15th place.
Leading the medal count is currently the USA with 19 gold, 26 silver and 26
bronze, having overtaken China by winning more Silver medals.
On
a population basis, we are well ahead of China. If only it worked that way.
The Official cash Rate (OCR)
Next,
the Official Cash Rate or as it is often referred to, the OCR, remains
unchanged at 5.5% for eighth consecutive review. The Reserve Bank has
hinted, interest rate cuts may be closer than previously thought and banks are
starting to reflect that in their fixed interest rates.
As of
Thursday 01 August 2024, all the major banks currently have the same 1 year
fixed mortgage interest rate which is 6.85%. ANZ
currently offers the lowest 2 year fixed mortgage interest rate, at 6.34% and
again the ANZ currently offers the lowest 3 year fixed mortgage interest rate
at 5.99%.
NZ Taxation Changes
I
am now going to cover off, quite a few changes relating to NZ Tax situation,
this is not to be construed as Financial advice, it is simply the changes, as I
understand them.
Effective
31 July, Tax rate changes have arrived. Not so much a reduction in tax rates
but a rise in tax thresholds, which in reality is quite different.
If
we look at the lowest tax bracket which was 10.5% up to $14,000 annually, the
10.5% bracket has now been stretched to $15,600 annual income. What this means
is, if you were previously earning just $10,000 p.a. there will be absolutely
no change in the tax you pay. Probably not what a lot of people understood.
However,
if you earn $20,000 p.a. Rather than being taxed at 10.5% on the first $14,000
and then 17.5% on the last $6,000 for a total tax of $2,520.
You
will now be taxed at 10.5% on your first $15,600 plus 17.5% on the last $4,400
giving you a total tax of $1,820. A
reduction of $700 tax for the year or $13.46 per week. Don’t
forget, as this has happened part way through the tax year, you will only
receive a proportional benefit of the savings.
A
similar situation, as that outlined above, occurs for all tax brackets, except for the
top tax bracket, which see no tax relief. This
kicks in at $180,001 - For most of the population, that would be a nice problem
to have.
Working for Families Payments (also effective 1st July)
The
maximum, yearly after-tax income to get the Family Tax Credit increased from
$35,204 p.a., ($677 a week) to $35,316, ($679 a week).
The
base rate for the In Work Tax Credit increased from $3,770, ($72 a week) to
$5070, ($97 a week). The new rate should update automatically and
create a new entitlement period. If you're eligible, you should have received a
Notice of Entitlement in late June.
Paid Parental Leave -The
new tax thresholds have updated. If applicable, you should have received a new
Notice of Entitlement in late June.
Family Boost Credit - For
families earning up to $140,000, they can now apply to have up to 25% of their
early childhood costs reimbursed. That
means a family earning up to $140,000 can apply to have up to $75 per week
reimbursed.
The Property Market
Auckland
is New Zealand’s largest city, which means investors often want to know: How is
the Auckland market behaving?
The
median sale price of an Auckland property up to the end of June is $1,048,000
(Jun 2024 – REINZ)
Auckland
property prices rose 0.42% over the last 12 months to June 2024 (REINZ)
Auckland
property prices increased 5.58% per year (on average) in the 20 years between
Jun 2004 – Jun 2024 (REINZ)
The
average rent in Auckland is $670 per week (May 2024 – MBIE)
30%
of all properties in New Zealand, are in Auckland (Stats NZ)
The
median house price in Auckland of $1,048,000 is up from $605,000 10 years
earlier.
That
means that the median Auckland property increased in value by 5.65% each year,
or $44,300 on average.
The
most expensive suburb in Auckland is Herne Bay, which has a median house price
of $3,410,700 and is located in the Auckland City district. That
means that Herne Bay's median house price is 325% of Auckland’s median.
The
least expensive suburb in Auckland is Auckland Central, which has a median
house price of $539,900 and is located in the Auckland City district. That
means that Auckland Central's median house price is 52% of Auckland’s median.
- Over the last 24 months (Jun 2022 - Jun 2024), Muriwai had the fastest-growing house prices in all of Auckland, at 1% per year.
- The
suburb that grew the slowest over that period was Oratia, which grew at a rate
of negative 10% per year.
- Auckland
house prices look relatively cheap compared to where we'd expect them to be, so
there could be some good buying out there.