The performance premium
ZAC SNELLING GROUP HEAD OF PROPERTY MANAGEMENT RAY WHITE GROUP
For much of the last five years, success in New Zealand’ s rental market was largely dictated by external forces, says Zac Snelling, Ray White Group Head of Property Management.
Record-low interest rates, limited housing supply and exceptionally strong tenant demand meant many investment properties performed well simply because the market was doing the heavy lifting.
Today, that equation is changing.
The central bank’ s decision to lift the Official Cash Rate( OCR) to 2.50 per cent signals that borrowing costs are beginning to normalise as the economy strengthens.
“ Inflation is persistent, further interest rate increases are anticipated, and investors once again find themselves operating in an environment where every dollar of income and expenditure matters.
“ That has changed the role of property management,” Snelling says.“ In stronger rental markets, almost any property can appear to perform well – it’ s under more balanced conditions that professional asset management becomes genuinely measurable.”
PERFORMANCE IS NO ACCIDENT
Nationally, rental conditions are a mixed bag, with the pace of growth across the sector having moderated. Rental listings have increased across many centres, tenants have greater choice, and competition between landlords has become more nuanced than it was only a few years ago.
Importantly, Snelling says this isn’ t a negative development.
“ Balanced markets encourage better investment decisions,” he says.“ Rather than relying on rapidly rising rents or constrained supply, investors are increasingly focused on the factors they can actually influence: tenant quality, vacancy periods, maintenance planning, presentation and long-term property performance.”
“ Those conditions have always mattered,” he says.“ They’ re simply becoming more visible now, particularly in a general election year.”
“ In stronger rental markets, almost any property can appear to perform well – it’ s under more balanced conditions that professional asset management becomes genuinely measurable.”
Zac Snelling, Ray White Group Head of Property Management
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