Auckland largest residential rental agency says landlords are coming under pressure to reduce rents.
Barfoot & Thompson, which manages more than 17,500 residential rental properties on behalf of landlords, says there has not been the usual spring lift in the number of prospective tenants looking for a rental property that often occurs around this time of year.
"There were around 1500 fewer enquiries about available listings in September compared to August (down 6.4%), leading to fewer groups viewing properties (-4.8%) and fewer applications (-4.1%)," Barfoot & Thompson said in their Monthly Rental Update for September.
"A total of 593 properties were rented in September, 4.8% below the three month average and the agency ended the month with 830 properties available to rent, 2.2% more than the same time last year," the Update said.
Barfoot & Thompson's General Manager Property Management Anil Anna said consistently lower levels of renter activity over the past year had created a highly competitive environment for landlords, prompting many to hold and in some cases reduce rents to retain existing tenants or attract new ones.
"With so much choice available and fewer people looking, property owners are under pressure to be more competitive on price and presentation," Anna said.
"Our managers tell us interested tenants are making very cautious and considered decisions about their next move and price [rent] is a major factor in the current economic environment," he said.
20 Comments
Great to see rents crash, alongside property values.
What a great time to be alive in NZ!
Let’s say a lot of landlords sell up as it’s just not profitable anymore. And then immigration/demand picks up again. People living in motels again.
As much as the huge untaxed capital gains made by property investors sucked, that doesn’t mean property investment is not required, it’s actually quite important. We are heading towards both property investment and building both being unprofitable, I can’t see how that ends well.
Broadly I'd expect house prices and rents to rise in line with income. A general upwards lift with inflation and productivity improvements (if we get any). As we just had a period where this got out of whack, with prices rising too fast, it seems like a good thing to me that we're coming back to something more sustainable.
If any investors bought during the frothy part of the market, then this is a fantastic lesson in investment psychology for them.
These things have traditionally moved in cycles, as do most industries. Prices fall, investment falls, shortages arise, prices stabilize and then rise, investment rises, oversupply brings prices back down again...This is normal, and the current government failed to do anything serious to stabilize the situation and in fact joined the momentum by cancelling their own housing and other infrastructure projects.
The thing is that it has become unprofitable at current rent levels in many areas (especially Auckland). The only thing that made it work was capital gains. The only fix is either rent increases, or house price decreases. If its the latter, then property investment makes even less sense until we hit the bottom, which could be a while away.
My point is that we need to prevent these cycles, they aren't really good for anyone. Yeah it sounds great that houses prices are going down, but it will actually cause a lot of pain on the way. And when it gets to the bottom, we'll get the opposite again, untaxed capital gains.
At lower price levels it will work, hence no not many are buying at these levels for investment, it's just that
the market price has not corrected enough - will it? as you say it's not possible to make it work from here on yields
If enough think like you then prices on investment property will fall until they do beleive.
Its just a market thats overshot, sadly its a huge market thats also been a major source of free money/credit for the underlying economy, IE ITM Fishing show etc
lots of low mile jetskis on trademe
Every time it corrects, people bail. Whether that is property investors, builders, building material companies, etc. So while it may be good news for people who want to buy a house, it just creates another problem later on.
It really needs to stabilise at a level where building makes sense and property investment makes sense from the rent alone. I suspect house prices can't go much lower than now before building is not profitable. So maybe rents need to increase?
Jimbo , online this is known as
Play Stupid games, Win Stupid prizes
Landlording has not been profitable for a long time.
The money to be made was in capital gains. aka. Speculation.
That has ended.
The self fueling speculation led to stupid house price rises, in my view New Zealand's greatest social disaster.
Should not have been allowed.
Agree 100%. Look at the low productivity economy we now have because of it.
Great to see rents crash, alongside property values.
Depends on what side of the fence you sit. And remember, property values more or less underpin our economy. The Ponzi goes, she all goes.
Exactly.
I have a little property, if it goes south a good nominal -30 or -40%, (real 50 to -60%) its a good thing for NZ longer term.
Those who have been awake should have a good portion in PMs, especially the profitable miners.
2026 will be the year of gold and silver miners SUPERPROFITS!!!
More than offsets a decade of Housing Ponzi flu and sickness!
"2026 will be the year of gold and silver miners " - I have heard that before! You could be right of course, but I doubt it will keep increasing at current rates for much longer. If you buy now you may be buying at the top.
take a look at a 100 year log chart, I doubt it
I don't advocate buying physical now (yet likely a good idea to have some)- but the miners, yes.
IMHO, the miners have not responded to the metal prices of 6 to 9 months ago, let along the recent rises to and past ATH.
Profits records will be blasted out of the water, if these PM prices hold 75% of current values.
disagree miners get hit harder in a pullback of physical gold, its like a leveraged trade, if you have none, buy physical
Hi ITG, yes in the past, miners and PMs/Gold selloff - buy not with todays general market fear based selloff. Investors flocked to the PM sector and its stayed strongly green.
I see the smart miners are now holding their gold and using it instead of cash, as a treasury holding.
Now the investment firms have finally cottoned on, much too late, and recommending some of your asset holdings - be in Gold. Talk about slow to the scene!!
Miners valuation have still not really reacted to the high PM prices. It like they don't see them holding.
Time will tell, yet I look forward to 8 to 15% divs next year, from producing miners.
Much superior to the 2.5 to 4.5% the heavily debt leveraged housing Ponzi monkeys will get and be losing money on. They only chase the once generous CGs....which are no longer there and for the next few years, non-existent.
remember gold has liquidity in a crash , it normally falls as margin clerks sell, then climbs... massive spike down BUY IT
remember gold has liquidity in a crash , it normally falls as margin clerks sell, then climbs... massive spike down BUY IT
Imagine the carnage if the non taxable interest component was not changed?
That said, has likely just delayed an inevitable meltdown.
will Labour remove?
Rents would be rising to offset that tax wouldn’t they ;)
Not in a flooded market, with low numbers of arrivals.
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