Survey reveals rental market challenges
The latest monthly Investor Insight survey compiled by Crockers Property Management and economist Tony Alexander (pictured above) revealed a slowdown in rent growth.
Landlords are seeking smaller rent increases as finding good tenants becomes the hardest since mid-2022.
The survey, which received 290 responses, showed that existing investors remain net sellers of property.
For the first time on record, more investors feel that bank willingness to lend is improving rather than worsening. A net 11% of property investors intend to sell an investment property within the next 12 months.
Long-term investment plans
The survey highlights that only 8% of investors plan to hold their property for no longer than one more year, while 52% intend to hold for at least ten years or never sell. This reflects a slight downward trend in long-term investment intentions.
New vs. existing properties
Among investors planning to buy in the coming year, only 19% would purchase a new property, while 69% favor existing properties. This continues a trend decline in intentions to purchase or develop new properties since the survey began in June 2021.
Rent increases
A gross 68% of respondents plan to raise rents in the next six months, down from 72% last month and 80% in May. The average targeted rent increase has eased to a record low of 4.5%, reflecting both slowing inflationary pressures and challenges in finding good tenants.
Bank lending attitudes
For the first time in three years, more property investors report that their bank is becoming more willing to lend. This net -1.5% result is a substantial change from the net 60% in January 2022 who said their bank was tougher on credit availability.
Investor concerns
Investors’ primary concerns include insurance costs, council rates, and falling house prices. Concerns about house prices have eased marginally, while worries about interest rates have decreased due to falling inflation and expectations of rate cuts.
However, concerns about net migration have sharply increased.
Tenant availability
A net 12% of investors report difficulty in finding good tenants, the weakest result since August 2022.
This stark turnaround from April's net 25% saying good tenants were easy to find could be attributed to the sharp drop in net migration flows recently reported by Statistics New Zealand.
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