4 days ago
Investors worry about political flipflopping as rents fall
Photo:
RNZ
Wellington has had the steepest year-on-year fall in asking rents, Trade Me says.
It has released its latest rental price data, which showed nationally rents being asked on the site were down 3 percent in the year to a median $620.
Wellington was down 7.7 percent, to $600 a week and Auckland 2.9 percent to $660.
Nationally, the number of rental listings on Trade Me Property was up 13 percent year-on-year in July, while demand was down 19 percent.
Trade Me Property spokesperson Casey Wylde said it was supply and demand that was driving down rents nationwide, and particularly in Wellington.
"With more properties available, renters have a lot more leverage and landlords are having to drop prices to secure tenants."
She said Wellington had a 27 percent annual increase in rental stock and a 6 percent annual drop in demand in July.
In Auckland, the market had been volatile but there was a clear trend, she said.
"Auckland rents are trending downwards, which is a big relief for renters in Tāmaki Makaurau who have been facing high prices for some time," said Wylde.
The number of listings in Auckland was up 4 percent year-on-year in July, while demand was down 23 percent.
Southland, Nelson/Tasman and Taranaki bucked the downward trend in asking rents.
Earlier data from Cotality said there was pressure on rents because they were already high compared to incomes and wage growth was slowing. Stats NZ data showed an annual drop for the first time since 2009 in May.
Rental yields had improved in recent years, from a trough of 2.1 percent to 3.8 percent on a national average basis. Lower interest rates also meant investors did not have to "top up" their purchases as much, if rent did not cover the cost of the home loan.
But a survey this week of Auckland Property Investors Association members showed political "flipflopping" was a big concern.
Eighty percent said their confidence depended on the next election outcome.
General manager Sarina Gibbon said election cycles were too short for housing policy to mature and frequent shifts undermined confidence and slow investment.
"A housing system that changes direction every three years isn't enough to build on. We need to stop making housing policy a party-political sport and start treating it like long-term infrastructure."
She said almost 57 percent said the policy climate was unsupportive of investment.
Short-term disruption is expected with large reforms, but poor communication risks alienating those whose investment is needed for supply growth.
"More than half of investors surveyed think the settings are against them. Some of that is the shock of big reforms. That's fine. That's just growing pains. But if you don't explain the treatment plan or how long recovery takes, don't expect investors to keep piling money into the system."
Almost half said compliance had become harder since October 2023.
"The biggest barrier to adding more rentals isn't a lack of money. It is not knowing what the rules will be in two years. Capital can take risks but not guesses. If you want more homes built, give investors rules they can trust will last," Gibbon said.
"Confidence is the foundation every investment rests on. Overhauls like the RMA reforms are major resets. We have to accept that some disruption is the cost of fixing deep problems. What worries investors is the risk that the next government will tear up the plans before the work is done. Housing needs policies that outlast election cycles so investors can commit with certainty."
Simplicity chief economist Shamubeel Eaqub said there were likely to be wider issues at play.
But said concern about political changes were likely to be part of it.
"Once the flip flopping starts no one believes it will stop."
Sign up for Ngā Pitopito Kōrero
,
a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
