Rising challenges for property investors
The latest Investor Insight survey by Crockers Property Management and Tony Alexander (pictured above) revealed a growing challenge for residential property investors: finding reliable tenants.
Of the 348 investors surveyed, a record net 22% reported difficulties in securing good tenants, a sharp reversal from a year ago when 24% found it easy. This reflects a significant shift in tenant quality and availability.
Decline in development interest
Investors are also showing less interest in property development, with only 11% considering taking on new projects – a record low.
The survey also noted that intentions to raise rents are declining, with a record low of 63% planning increases, down from 80% in May, signalling some relief for tenants amid inflation concerns.
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Investor activity remains steady
Stable property purchase intentions
A net 10% of respondents are considering buying property in the next 12 months, showing little change since mid-2023, despite shifts in interest rate expectations.
Meanwhile, 31% are thinking about selling, consistent with trends since last year when investor selling increased as the market began to cool.
Long-term ownership plan
Despite rising selling intentions, most investors still plan to hold their properties long-term, with 57% intending to keep their investments for at least 10 years or never sell.
This suggests that the increased selling seen last year primarily came from those previously planning to hold for extended periods.
Financial and market concerns
Bank credit easing, costs rising
A record net 10% of investors report banks becoming more accommodating with credit requests, a positive shift from the tighter credit conditions of 2021.
However, rising costs such as insurance and council rates continue to weigh on investors, with these concerns remaining high since late 2022.
Outlook for property returns
Worries about house prices are diminishing, with only 6% of investors concerned about price drops, down from 10% in June.
However, maintenance costs and falling migration flows are emerging as significant issues, highlighting the varied challenges property investors face in a shifting market.
Regional variations in tenant supply and market dynamics
Employment confidence varied across regions, with Auckland and Wellington showing the most pessimism.
Despite broader sector struggles, Waikato, Bay of Plenty, and Canterbury reported increased optimism regarding job security and earnings growth, indicating pockets of resilience in an otherwise tough market for both landlords and tenants.
Read the Tony Alexander Survey Report September 2024.
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