Propertyscouts Auckland

​​​​​​​If the residential rental market were the stock market - 19th Jun 2018

​​​​​​​If the residential rental market were the stock market

If the residential rental market were the stock market:  Then market commentators would say that we were in the middle of a ‘bear market’.  The term ‘bear market’ is used to describe the stock market when stock values are falling and the overriding feeling is one of pessimism.  While property values seem to be holding their own, just, there certainly does appear to be an ‘air’ of negativity amongst landlords.  And it’s not hard to identify the source of the angst.  The present Governments proposed changes around the Residential Tenancies Act and other legislative changes will negatively impact landlords by increasing their costs, of that there is little doubt.  Private landlords remain the biggest providers of residential rental properties in this country and it seems incredibly short sighted to negatively target the largest provider in such an important sector.  With around half of all Kiwis now living in rental accommodation, the backlash, if the Government doesn’t get things right could be exponential.  Industry experts (including us) have for some time been saying that the over-riding effect will be an increase in rents.  Not convinced?  Then think about these stats from NZ Property Investors Federation (NZPIF).  According to their analysis, overall rental prices are up 6.1% in 2018 compared with the same period in 2017.  And what’s worse for renters is that this is a higher price rise than during the last two years where rental prices increased 3.4% in 2017 and 3% in 2016.  According to NZPIF and our own analysis rental price increases are set to continue as landlords continue to try to off-set their increasing costs.        

Buy, sell or hold:  Last month we talked about the options for investors in this sort of market.  Given that we’ve compared our present residential market to the stock market we thought that we would leave it to arguably the World’s foremost share market commentator and investor, Warren Buffet who made the following (now) famous quote when asked about his share buying strategy.  Buffet said “Be fearful when others are greedy and be greedy when others are fearful”. 

Shared via the monthly newsletter from our Rental Property Management team at Propertyscouts. 

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