In the first half of this year landlords and property managers had found it harder to rent properties with them taking longer to rent & a lack of good applicants available, but thankfully it seems we have turned a corner. We are now experiencing shorter “days-on-market” and have better quality applications coming through.
The median rent has increased year on year, which provides some reprieve from higher interst rates for landlords, although rents appear steady currently from what we’ve seen in the last couple of months.
Some renters have taken the opportunity to buy with government-backed schemes for first home buyers helping them into their own homes, although from recent figures that have been published it is currently cheaper to rent than to buy.
Economist Tony Alexander published an article last month where he discussed migration causing rents to increase this year. With data from his monthly surveys of residential property investors he says “At the end of last year a net 8% of these investors said that it was hard to find good tenants. Come March a net 6% said they were finding it easy, July 17%, and this month a record net 22% are finding good tenants easy to secure. The rental market has turned firmly this year and while some of this will reflect properties going back to servicing students and tourists, the main reason will be the 2.1% NZ population surge this past year. What will decreasing rental property availability and eventually more firmly rising rents do to house prices? Push them higher. In fact, this effect will be magnified by the extra increase in rents coming from rising costs such as for insurance and rates.”
Whatever the cause, with ever increasing costs, landlords can be thankful for lower vacancies and higher rents.
– Natalie Hachache, Director, Spectre Property Management Services Ltd
Spectre Property Management is an accredited property management company with REINZ and all our property managers hold the National Certificate in Property Management, we operate a trust account and do mandatory training each year in accordance with the REINZ accreditation requirements.
The Residential Property Managers Bill was introduced to Parliament in August 2023.
The Bill aims to create a comprehensive regulatory regime for residential property managers and residential property management organisations. This provides assurance to property owners, and the tenants that rent their properties, that all residential property managers meet conduct and competency standards and are qualified and accountable.
Nearly a third of New Zealand households live in rental accommodation and around half of those residential rental properties are looked after by property managers. While many property managers abide by appropriate professional standards, the sector as a whole is not legally required to meet minimum conduct, competency and industry practice standards. This could mean inconsistent quality of services for tenants and owners. Regulation would give tenants and property owners confidence in the quality of the property management services they receive.
The proposed new regulatory system will include:
-compulsory registration and licensing for individual property managers and property management organisations,
-training and entry requirements,
-industry practice standards, and
-a complaints and disciplinary process.
It will only apply to property managers, not private landlords, Kāinga Ora, or registered community housing providers. That means about 42% of the residential tenancy market will be captured.
REINZ Chief Executive, Jen Baird says this legislation will establish sector-wide practice standards for professional residential property managers. “Property management continues to grow in complexity. Over the past four years we’ve seen a raft of changes to legislation, including the Residential Tenancies Amendment Act, Healthy Homes legislation, changes to the Privacy Act and Health and Safety at Work Act, and more. Add to that environmental and social challenges such as Cyclone Gabrielle and we have a profession that New Zealanders have come to rely on.
“It’s a complex business so it’s important there are entry standards and an independent disciplinary and complaints resolution process. These are important to ensuring minimum standards and safeguards are in place within a profession that has an impact on something as important as the homes people live in.”
While it does not apply to landlords, which Renters United has said was “disappointing”, the bill includes a new provision directed at landlords, Auckland Property Investors Association general manager Sarina Gibbon said. The Tenancy Tribunal could now order a landlord to use a licensed property manager for any of their tenancies if the tribunal found the landlord had committed two unlawful acts under tenancy law within five years. Gibbon said the unlawful acts listed in the bill were not nit-picking, and would not include honest mistakes by landlords such as missing dates on paperwork. Rather they were serious breaches of tenancy law, such as not complying with the healthy homes standards, issuing retaliatory notices of termination, or terminating tenancies without grounds. “It seems an even-handed way to approach the problem. The bill may not be perfect, but it is a good starting point, and it is fantastic to find ways to make it difficult for bad landlords to act unchecked.”
Reserve Bank of New Zealand (RBNZ) forecasts suggest the official cash rate (OCR) is at or near its peak, although the central bank has pushed back the timing of the first rate cut. The RBNZ left the OCR at 5.50% in both July and August, following 12 consecutive rate rises, and is expected to leave rates on hold again at its next meeting, on October 4. The latest Monetary Policy Statement, which was released in August, suggests the OCR will climb to 5.60% in the March 2024 quarter, return to 5.50% in December 2024 and fall to 5.40% in March 2025.
By contrast, the previous Monetary Policy Statement, released in May, forecast that the OCR would peak at 5.50% and then fall to 5.40% in the September 2024 quarter. Crucially, inflation, which peaked at 7.3% in the June 2022 quarter and was 6.0% in June 2023, is expected to fall to 2.7% by September 2024, placing it once again within the RBNZ’s target range of 1-3%. Unemployment, which was 3.6% in the June 2023 quarter, is forecast to rise to 4.4% by the end of this year and 5.3% by the end of next year, before moderating to 5.1% by December 2025. The reason the RBNZ aggressively increased interest rates between October 2021 and May 2023 was to reduce inflation by slowing the economy. Judging by the forecasts above, the RBNZ appears to believe it is on track to achieve its goal.
RBNZ says property prices have stabilised
Meanwhile, the Monetary Policy Statement suggested property prices had now bottomed out. “We assume house prices grow gradually over the next year before increasing at a slightly faster pace in nominal terms over the remainder of the projection,” the Reserve Bank said. “Although house prices have stabilised, they are significantly below their previous peak. This lower level of house prices is expected to flow through to less household spending over the projection, as aggregate household wealth has fallen substantially.”
CoreLogic Chief Property Economist Kelvin Davidson said that while he essentially agreed with the RBNZ forecast, one potential spoiler was an ongoing decline in the number of properties being listed for sale.“This could potentially trigger some more abrupt competitive price pressures amongst buyers than we’re currently anticipating, although in turn this would tend to bring forward more listings and mitigate some heat for prices,” he said.
– Originally Published 03/09/23 – Logan Reardon – Mortgage Adviser, Loan Market
A new dawn is upon us….
– Ronald Hachache, Licensed Agent REAA (2008) – published 17/9//23