New builds gain traction amid shifting property preferences
Property investors are experiencing near-record difficulty securing quality tenants despite planned rent increases continuing to moderate, according to the latest Crockers Property Management and Tony Alexander Investor Insight survey.
The October survey of 274 residential property investors found a net 39% reported difficulty finding good tenants, slightly worse than September’s 36%. While this represents a challenging market for landlords, the deteriorating trend appears to have stabilised since July.
The difficulty securing tenants comes as investors’ appetite for rent increases continues to ease, the report noted. Landlords now plan to raise rents by an average of 3.8% over the coming year, down from 3.9% in September and 4.1% in August. Just 42% of landlords plan to raise rents in the next six months, essentially unchanged from recent months.
“It seems best to stay with a view that rent raising ability continues to ease off for landlords as they face a market for tenants not in their favour,” the report stated.
The findings suggest tenants currently enjoy a relatively good range of accommodation options, though rents remain high by historical standards.
Interest in purchasing investment properties remains subdued, with just 18% of existing landlords considering buying another property within 12 months, down from 20% in September. Meanwhile, 33% are considering selling, up from 31% the previous month. This produces a net 15% of landlords indicating intentions to sell in the coming year.
“Almost three years down the track from first home buyers entering the market firmly, investors have yet to sustainably follow,” the report noted.
Shifting preferences
A notable shift emerged in property preferences among potential buyers. The proportion looking to purchase existing properties dropped sharply to 62% from 76% in September, with corresponding gains in interest for new builds and property development. The report suggested this could signal an early response to falling interest rates potentially driving increased residential construction.
Landlords’ primary concerns remain council rates, insurance costs, and maintenance expenses. However, concerns about insurance costs are easing mildly as evidence emerges that some premiums are lower this year than last.
Banks’ lending attitudes have improved significantly, with a net 16% of landlords reporting financiers are more willing to advance required funds – the second-strongest result since the survey began.
Half of respondents plan to hold their properties for more than a decade or never sell, consistent with readings since late 2023. Interest in short-term holdings under five years remains low.
The survey received responses primarily from Auckland (40.5%), with Wellington and Canterbury each representing 10.9% of participants.
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