Adapting to change
Source : mortgages . co . nz , Tony Alexander
Zac Snelling Head of Property Management Ray White New Zealand
Kiwis across the country breathed a sigh of relief recently , with news that the Reserve Bank of New Zealand ( RBNZ ) cut the Official Cash Rate ( OCR ) for the first time since February 2020 .
The move is poised to impact the domestic property market in a big way , with demand from residential investors building recently in response to changes from renewed interest deductibility provisions , relaxed Brightline Test ( BLT ) rules , an easing off of the Credit Contracts and Consumer Finance Act ( CCCFA ) rules , loosening Loan-to-Value Ratio ( LVR ) requirements , and some lenders showing more flexibility with fixed costs and affordability calculations for new loans .
Anecdotally , we are hearing that the widespread anticipation of lower mortgage rates continues to attract investors back to the market , supporting stability within the property management sector .
Over the past month , we ’ re pleased to see the rental market find equilibrium following a significant surge in demand earlier in the year . However , this provides both challenges and opportunities for stakeholders in the sector .
STABLE YET EVOLVING
Following a sustained period of heightened tenant demand , New Zealand ’ s property management industry has benefitted from a recent change of pace . An acute supply shortage and grave concerns about tenant welfare have given way to a new phase of stability , which is welcome news after a rollercoaster few years in the industry . Despite this , trends are far from uniform .
In certain regions , we are seeing increasing evidence of a two-horse race , with a nearly even split between local supply and consistent demand . This is particularly evident in areas that have suffered from successive years of low housing investment .
Canterbury is a region bucking the main centre trend , with available rentals still seeing strong demand and days on market remaining low - particularly for larger properties . This reflects a shift in tenant preferences and needs , while the preference for larger homes speaks to a broader industry trend – that Kiwis continue to pine for the right type of property .
Two-bedroom townhouses have emerged as a popular and somewhat lucrative development option in recent years . However , preferences within the current market indicate that tenants are looking for more space , perhaps driven by changing lifestyles and the ongoing effects of the pandemic . This trend underscores the importance of developers and landlords aligning their portfolios with market demand to ensure long-term success .
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