Private property issue #23 - more BS headlines

Private Property – our weekly newsletter that gives you insights into what's happening in the NZ property market. Written by managing director Andrew Nicol. Sign up to receive this in your inbox every Thursday.

Rents have been going mental recently. They’re up 4.6% over the last year across the country, according to TradeMe (June 2022).

That’s why I was surprised to see this recent headline: Wake up landlords, the rental market has changed, property managers say.

This Stuff article stated, “… landlords need to recognise it is now a “tenant’s market”, property managers are warning.”

These can be pretty scary words to an investor. But are we actually seeing the rental market slow down?

Or does the data tell a different story? Let’s take a look.

#1 Trademe rental index

The data shows that up until April, rents increased a lot.

However, one month later (May), there was a slight decrease. And in June, another small drop.

By small, I mean tiny. Rents across NZ (as a whole) are down $10 a week (1.7%).

However, that masks the differences across the regions. Take a look –

Rents in Wellington, Nelson and Southland are down. But everywhere else is up or flat.

So no large rental decline here.

#2 Tony alexander investor insights survey

Next, let’s look at how easy it is to find a tenant.

This graph shows the net proportion of investors who find it easy to find a good tenant.

In simple terms,13% more landlords say it’s harder to find good tenants than those who say it’s plain sailing.

Seems scary. But, take a look at this.

Yes, just over 20% of investors say it’s hard to find a tenant, but nearly 70% say it’s about the same as normal.

Very different results. But no journalist will ever write a headline saying: “70% of people say everything’s ‘pretty normal’.”

#3 – What are real investors seeing on the ground?

Finally, let’s look at what real investors are saying on Facebook.

Yes, it’s dangerous to believe everything you read online. But, you’ll look at this to see what real people are experiencing.

When the article was posted, one commenter disagreed with the article: "11 applications in 24 hours, sorry Stuff”.

Another said, “I totally agree, they seem to forget what’s happening in the South Island”.

And my personal favourite was “the rental market is just Wellington and Central Auckland, didn’t you know?”

So…What does all this mean?

Some evidence suggests the rental market isn’t as hot as it was in April. But, it’s too early to say the entire country is seeing a rental market slow down.

Take a look at this graph. Auckland rents declined 6 times in the last 24 months, particularly in winter and near the new year’s break.

But over those 2 years, rents still went up 4.6%.

The key takeaway here is that sometimes you’ll read “scary” news articles, but in practice, nothing will come of it.

One or two months down does not a downturn make.

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