Rather than cashing up, landlords are buying more properties after changes to the Residential Tenancies Act

Rather than cashing up, landlords are buying more properties after changes to the Residential Tenancies Act
Tony Alexander.

Fears that recent changes to the Residential Tenancies Act would cause investors to exit the market appear to have been baseless, according to the latest survey of real estate agents by the Real Estate Institute of New Zealand and economist Tony Alexander.

The October survey showed a strong majority of agents reported more investors were looking to buy residential properties than were looking to sell, and the numbers looking to sell had increased every month since May, with investor interest more than twice as strong in October as it was in May.

"That ...should finally put to rest the argument that the government's imposition of new rules raising landlord costs and shifting tenancy power to renters, will generate an exit of investors from the sector and produce a sharp reduction in rental accommodation availability," the report said.

"If some investors are selling, many more are buying."

The survey's results suggest the claims, by landlord groups prior to the passing of legislation, of a mass exodus of landlords from the market was probably little more than scaremongering motivated by self interest.

The survey also found that a slim majority of agents reported seeing less interest in local properties from overseas buyers, which made it unlikely that there would be a rush of returning New Zealanders to prop up demand.

"This validates the fact that currently the gross inflow of Kiwis to our shores is very low and suggests that when international travel becomes available quarantine-free, we will not see the rush of one million Kiwis back to our shores as some might be thinking," the report said.

"However, it should be noted that ahead of lockdown the net flow of Kiwis back home hit a record of +20,000 after averaging an annual loss of that amount in the previous two decades," it said.

The survey also found that obtaining finance was still a concern for many, even with the removal of loan-to-value ratio restrictions on new mortgage lending, with 46% of agents reporting this as a concern.

However concerns about rising unemployment and loss of income are fading, with just 27% of agents reporting those as concerns compared to 48% in May.

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32 Comments

Less than ideal prospective tenants will find it much more difficult to secure rentals as a result of landlords being more risk averse.

Clearly and rather obviously
More burden on the state and society

Which is where it should be anyway. Private landlords shouldn't be having to house the dregs of society since it becomes a gamble as to whether your house will get trashed by a bad tenant or not. The government has the resources to handle their houses getting trashed; a private landlord can be set back many years by 1 rotten tenant.

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Many people would say that it is landlords that are the dregs of society.

Certainly some of them, others are fine.

Some landlords would prefer less tax more income and the dregs of society to live on the streets..

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"it becomes a gamble as to whether your house will get trashed by a bad tenant or not"

Isn't this the game private landlords are willingly participating in?
Risk / reward.

Take the risk of 'investing' in Glen Innes or Manurewa (whilst claiming accommodation supplements) in the hopes that creeping gentification (accompanied by creeping loose monetary policy & moral hazard) will be your get-rich-quick scheme then pooh-pooh you if you incur some costs along that journey.

Unless it comes down to whether the mortgage gets paid or not.....

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I suspect being a landlord is secondary to the main objective which would be low risk stashing of capital in hard assets.

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If commentators like Greg and Tony could analyze and predict things with anywhere near the accuracy and certainty they purport, surely at their ages, they would be earning millions a year from their savvy investments and would have no need to inflict their paid, twisted views on the NZ property market. What annoys me most is that I doubt they actually believe most of what they say themselves.

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Tony Alexander was confronted on Linkedin about making sweeping conclusions from survey research. It turned out that the research data was collected from respondents within his own mailing list. As an economist (and as a professional) or anyone involved in the research fields, it's not particularly 'rigorous'. If the guy had at least stated the limitations of his data pool, he would have given himself some credibility.

Interested to take a look at this. Would you have a link you can share?

Interested to take a look at this. Would you have a link you can share?

If you're connected to him on Linkedin, you could search through his activity. I think he posts his newsletter content.

TA was well aware he was using sample selection bias when he did that survey and hoped he could sneak it through unnoticed. Not particularly rigorous? I would deem it closer to "an outright attempt to distort the true picture for the sole purpose of his own personal gain". Recently he also blatantly tried to mould the returning NZers stats to fit the narrative he is paid to follow. Greg Ninness seems almost as unbalanced in his narrative and use of stats. Come on Greg, prove me wrong and pen an article on how the status quo will affect someone still studying if we remain on this trajectory for a few more years. You can do it, can't you? No? Didn't think so!

KS - Have you even read Tony's results ? I would recommend anyone to subscribe to his excellent column. I'm sure he's very well off, he is passionate about economics why slag him if you don't agree with him let it go. After following him for 20 years plus anyone, that's anyone with totally zero ability in finance/investment could be very wealthy. He has helped guide me to early financial security and a early self funded early retirement.
To those that don't like him fine but for those that do he is a breath of fresh air !

I back you up on that Shoreman.
When I was involved in property I found his comments on market direction good and he saved me considerable amounts on interest payments when mortgage rates were both volatile and a lot higher and therefore savings a lot more significant than now. The savings on interest (including breaking terms) was at the time he was BNZ Chief Economist and I was with BNZ - so his advice was clearly not in BNZ financial interest.
I find comments like KS cheap baseless shots are more about a much-in-need bolstering of self-ego or self-importance. It takes no skill to be an anonymous key board warrior to slag-off.
This is going to come as really enlightening news to KS; if you don't think commentators like Tony Alexander are of value then it is quite simple - don't read his articles. Why the hell did you bother spending time reading this interest.co article other than to post and massage your ego?
I do not hold Tony Alexander up as the single read - clearly one needs to read a range of views (often which vary and are in conflict), especially note their rationale and come to one's own conclusion.
KS after I read your post, I did consider it and simply shook my head in disbelief - pathetic comments which added absolutely nothing to anything.

I actually come to this forum to read the different range of perspectives hoping to obtain, angles, insights and ideas that I had not considered. OFC, as with anyone, not everything TA writes is wrong or harmful and I am sure some of his stuff has helped many. However, the way his narrative always seems to twist everything to his financial backers advantage and target the vulnerable, financially illiterate within our society, I view him with the same disdain as I would a bully, preying on the weak. My only hope is that more people will question whether views and articles like his are impartial and without bias before blindly staking their financial well-being on them.

BTW, if living 20 years in a $400 a month apartment and eating $1 street food daily in SEA, today driving a $4000 car in NZ and jumping on literally thousands of Vegas buses while owning a free hold NZ house and 7 figure stock and bank balances are signs of a much in need bolstering of self ego then guilty as charged. Anonymous? LOL. I may be almost the only real name user on here.

"anyone with totally zero ability in finance/investment could be very wealthy."

Halfwits have become wealthy in the past 20 years because the Reserve Bank is sponsoring moral hazard.
Not because Tony Alexander, Ashley Church et al are publishing their reckons.

Indeed. I am one of those halfwits but at least I realize it!

He has helped guide me to early financial security and a early self funded early retirement.

How? TA's not a financial advisor. He's an ex-bank economist who worked during the greatest asset bubble period in human history. His commentaries were based on driving business for his employer. His current commentaries are based on his own self interest. Doesn't make him some kind of Nostradamus.

How could an over 50 year old blind monkey investing in almost anything mainstream in NZ over the last 30 years not have become at least very wealthy? Show me any, even imaginary, diversified, NZ portfolio (shares, residential property, commercial property, bonds, term deposits, Kiwi saver) which has not made an absolute killing. Maybe only Mary Holm could dispute this.

You mean have I paid to read his self written, and no doubt slanted results? No. A competent, very well-paid NZ investor of Tony Alexanders age should have equity in excess of $5m, absolute minimum. Maybe he does, who really cares. The "impossible to lose" situation that has been the financial landscape in NZ since at least 1990 has given you financial security and early retirement. It wasn't Tony's priceless advice or your savvy investing. Like me, you were prolly just born in the right city, at the right time and in the right family. Causation of your wealth was mainly luck as was mine (not you or Tony). Be smart enough to realize it, understand it but most of all enjoy it. And hope our young don't expect to succeed by copying it.

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...Alexander de-coded "please don't bail out of your property, us banksters are worried the ponzi might come to an end..everything is rosy, become a landlord"

rastus
He is no longer a "bankster"

True . He is now a real ass state rent boy.

Tony is saying the property Kool-Aid is so refreshing, drink up..

That picture could be used in the dictionary to describe 'smug'.

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It’s got nothing to do with the residential tenancies act, the abolishment of LVRs is the reason investors are piling in with FHBs

Good article and work from Tony. A nice change to see him debunk garbage emanating from property investors...

Fritz.. but surely you noticed how from the very first sentence to the very last it was all twisted towards (fake) positivity for the property market in every way eg mentions low unemployment but conveniently forgets to address highly relevant underemployment and underutilization issues. Classic TA spin.

Well that surprises me, however money is trying to find a home and it is of little value in the bank right now. With interest rates so low the returns are clearly better than costs / risks of meeting the new tenancy criteria's.

Tony A is so far out of touch with what is really happening. In fact most of us landlords are currently in the process of cashing up our residential rentals. I've just listed 3 more this week for sale. These latest rules will ad an avalanche to the already 20,000 homeless created under this Govt. Be careful what you wish for tenants, because you're forgetting who is the one who provides a roof over you and your family's head.