Migration surge puts upward pressure on rents
Alexander said the latest survey validated the increase in rents recorded last month, and was a sign of the fresh upward pressures bearing on rents.
The survey showed that landlords were finding it easier to find tenants, and that demand was lifting, but the Government had discouraged growth in the rental stock through tax changes.
The incentive to switch property use back towards tourism is increasingly in favour of rents rising at an accelerating pace, Alexander said. The average rent increase sought by landlords had risen to a ten-month high of 6%, up from 5.6% in March and a low of 5.3% in December.
Residential property investment is a long-term activity, and most landlords plan to hold their property for 10 years or longer.
The Reserve Bank is set to impose restrictions on debt-to-income ratios, which will affect landlords more than others. Someone with seven to 10 properties and high existing debt levels may not be able to buy another property for 10 years.
If landlords were not able to buy as many properties, rental demand might go down too, Davidson said.
My Thoughts:
With migration being one of the main driver for property demand, it is no surprise that housing rents will continue to escalate in a tight supply market like New Zealand. This offers investors increased cash flow to deal with higher interest cost or as net income. With the opening of borders since a year ago, NZ has seen an influx of international students, professionals and business travelers into the country and that’s already putting pressure on the already tight supply experienced during the pandemic years. Would you want to be a landlord today?
