More investor insights in new survey
The latest Investor Insight survey from Crockers Property Management and Tony Alexander (pictured above) revealed record lows, with only 17% of investors planning to buy another property and 50% intending to hold their properties for at least 10 years or not sell at all.
Declining interest in new properties
A record low 17% of the 350 respondents are considering purchasing another property in the coming year, down from 20% last month and 22% a year ago.
The peak was 29% in September 2022. The proportion thinking about selling sits at 31%, down from 33% last month but above the three-year average of 24%.
The net proportion of investors looking to buy again is at -14%, the lowest since the survey started, indicating a reduction in overall investment in residential property.
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Long-term investment plans shift
Since early 2021, an average of 61% of investors planned to hold their properties for at least ten years or never sell. This proportion has now fallen to a record low of 50%.
Investor preferences for property purchases
A record low of 17% of investors plan to buy new properties, down from 30% a year ago and 53% in July 2021, indicating challenges for builders.
Most investors prefer standalone houses over townhouses, with this trend increasing for new purchases. Developers of multi-unit dwellings face declining interest. For existing properties, the preference for standalone houses is stronger, though the trend is less pronounced.
Rent increases expected
Survey findings showed that 80% of respondents plan to raise rents in the next six months, slightly above the average of 77%. The average rent rise planned by landlords is 5.4%.
“Rising interest rates tend not to boost rents, so when interest rates fall in New Zealand through 2025, tenants should not expect additional downward pressure on rent growth,” Alexander said.
Bank attitudes and debt repayment
The survey showed few investors feel their banks are being particularly obstructive at the moment.
Most investors prefer fixing their mortgage interest rates for one year or less.
Despite high interest rates, only 31% of investors plan to repay debt faster, near the lowest reading for the past three years.
Investors’ increasing concerns
Insurance costs, council rates, and maintenance costs are the top concerns for investors. Worries about house prices falling have risen, reflecting the slowing real estate market.
“Worries about extra pain from interest rate changes continue to ease,” Alexander said.
Difficulty finding good tenants
The net proportion of investors saying it is easy to find good tenants has declined to 14% from 25% last month. This may be influenced by the strong outflow of Kiwis and the inflow of foreigners.
Funding retirement
For investors looking to sell their properties, the primary motivation is funding retirement. This proportion has jumped to a record 69%, driven by the increasing costs of council rates and insurance, the survey found.
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