Rent, retention and reality
ZAC SNELLING GROUP HEAD OF PROPERTY MANAGEMENT, RAY WHITE GROUP
If you only read the headlines lately, you’ d think the New Zealand property market was somewhere between stalled and sputtering.
Inflation has risen; household budgets are still stretched, and every few weeks there seems to be another prediction about where rates, values or the wider economy might head next.
After several years of false starts, it’ s understandable that residential property investors feel fatigued by constant uncertainty – a bit like a long road trip where the fuel light’ s been flashing for hours.
However, when you pull over and take a look under the hood, the working parts are considerably more stable than dashboard warnings might suggest.
In my role, I spend a considerable amount of time working across both New Zealand and Australia, and across the ditch, the conversation around property investment has become even more politically charged. The Australian Labour Government’ s latest budget announcement confirmed plans to phase out the 50 per cent capital gains tax discount and restrict negative gearing- reforms being described as the biggest shake-up to the tax system in 25 years.
The reaction from investors has been immediate.
Many openly warned that they would increase rents to offset additional costs, creating a striking sense of déjà vu for anyone who watched New Zealand navigate similar policy changes in 2021.
What it highlights is a reality both countries continue to wrestle with: governments remain heavily dependent on private landlords to provide rental housing.
Despite years of policy experimentation, incentivising landlords into new-build housing did not fundamentally solve the issues of supply and affordability in New Zealand.
That market still relies on private rental supply because the underlying demand for housing never disappears.
That’ s why it’ s important not to confuse softer sentiment with structural weakness.
In April, Ray White recorded 4,418 new tenancy applications nationally, compared with 1,126 signed tenancy agreements – effectively four applications for every available rental property. Importantly, this was our lowest month for new applications outside of the traditionally quieter December period.
Even at a softer point in the cycle, demand still materially outweighs supply.
RAY WHITE NOW NEW ZEALAND | 18