Advisers see stable lending as landlords eye long holds
The latest Crockers Investor Insight survey with economist Tony Alexander (pictured) shows a gradual lift in investor confidence.
For the second month in a row, more landlords said they were considering buying another property within the next 12 months – up to 20% in September from 18% in August, 17% in July, and just 14% in April.
“At 20% the proportion of landlords looking to buy is the best since June and that perhaps gives better perspective to the recovery since April. That is, the upward trend is very small,” Alexander said.
Meanwhile, 31% of investors indicated they were looking to sell in the coming year, down from 34% in August. This leaves a net 11% of landlords planning to sell – an improvement on the 16% recorded last month.
Investor sentiment is being shaped by wider economic shifts, with New Zealand’s 0.9% GDP contraction in Q2 raising the likelihood of deeper OCR cuts. Major banks now expect sharper mortgage rate falls, which could aid new purchases but also signal risks of disruption and job losses, Cotality chief economist Kelvin Davidson said.
Investors prefer existing dwellings
Those planning to buy remain firmly focused on established properties.
“Investors have a high preference for buying an existing property if they are to buy again and interest in a new-build is low and still declining,” Alexander said.
More than half of landlords (53%) said they intended to hold their investments for at least a decade or never sell, highlighting ongoing long-term commitment to the sector.
Rent rise expectations trending down
Rent pressures are easing, with a net 41% of landlords saying they intend to raise rents in the coming year – the lowest on record for this survey.
“The average rise in rents which landlords would like to achieve has fallen back to 3.9% after an unsustained blip up to 4.1% in August. The trend is firmly down. A year ago, this measure stood at 5.0% and two years ago 6.0%,” Alexander said.
While media coverage has focused on falling rents, Alexander said the survey has been signaling slowing rental growth since early last year.
This aligns with broader inflation trends: Davidson noted that food prices are still up 5% annually, but rents are flat to falling, supporting expectations that the Reserve Bank will continue cutting rates.
Lending conditions improving
The survey also shows a shift in bank attitudes toward property investors. A net 9% of landlords said they are finding their bank more accommodating, in contrast with the tighter credit conditions seen during 2021-23.
“This evidence of willingness to lend has been apparent since the middle of last year,” Alexander said.
Costs remain the biggest concern
Top concerns for landlords continue to be insurance premiums, council rates, and maintenance costs.
Concerns about financing costs have eased in line with Reserve Bank rate cuts this year, while worries about vacancies have spiked to a record high, reflecting challenges in securing quality tenants.
After two months at record levels, the proportion of landlords struggling to find good tenants fell to 36% in September, down from 41% in August, but still well above the 22% recorded a year ago.
For mortgage advisers, the survey highlights a market in transition: while selling intentions remain high, buyer interest is slowly lifting, rent growth expectations are softening, and lending conditions are becoming more favorable – all against the backdrop of a weaker economy and the prospect of deeper OCR cuts.
Read the full investor insight here for more information.
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