More rental properties needed
Friday, October 31st 2008, 3:31PM 
8 Comments
A story which caught my attention today was one about the importance of property investors in the New Zealand economy.
The story here reports on comments from the Department of Building and Housing (DBH) that the number of people in New Zealand renting is increasing and the trend is likely to continue.
There are a bunch of reasons for this, which are explained in the story, many of them being global trends rather than locally-driven ones.
Where I thought this was interesting is that if the government department responsible for the sector is talking about the growing importance of landlords, then surely the government should be listening and making sure the rules around property investment support Kiwis investing in bricks and mortar.
Past Blogs in recent weeks have talked about housing policy and next week’s general election, I just hope whoever wins, takes on board this information from DBH and helps investors.
If not I guess we end up with more state housing and overcrowding in private dwellings – not an attractive idea.
The other story which is related is that a survey out this week shows rental property is not currently seen as the place which will deliver investors the best returns. Rather property has fallen from grace and been replaced by term deposits and bank savings accounts. I can understand this at the moment, but again Kiwis need to see property as a good investment which provides adequate returns for the risk and the amount of capital invested.
If this doesn’t happen then we end with the situation that there won’t be sufficient rental houses in the private sector pool to address this trend DBH have identified.
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Comments from our readers
On 31 October 2008 at 5:37 pm Lee Kammerer said:
Not with Labour. They hate anyone/anything they can't control and that most certainly includes private property investors. "Ring fencing" will be the catch phrase if they get re-elected. On 31 October 2008 at 10:00 pm Marion Barr said:
There is definately a need for more rental properties. Every time I advertise for tenants I wish I had another 10 houses to rent to the families that miss out. I am constantly receiving phone calls for houses to rent. The mean people who work in government departments need to have some compassion instead of being mean spirited about constantly coming up with mean ideas to make life as difficult as they can for the New Zealand people who have to live in the real life. I love being a landlord, providing homes for New Zealand families. I wish I could afford to buy more. On 1 November 2008 at 7:48 am Glenn Morris said:
Another statistic that is not talked about is the growing number of properties under management by professional property managers. I have been amazed at the growth of independent property managers through out New Zealand. I would be interested to see some some figures from DBH. They do gether up this information because all property managers have a special code.
From my perspective as an independent property manager being a foundation member of the Independent Property Managers Association (IPMA)my own business has been growing rapidly and I have observed some other IPMA members businesses growing also.
On 2 November 2008 at 1:41 am Nemydom said:
Rental property is the most risky investment at the moment. Nobody knows how far down it will fall in the nearest future. It is a good time to get rid of houses in New Zealand while they are so expensive. The property in this country enormously overpriced. On 2 November 2008 at 10:47 pm PAD said:
With the OCR likely to be at sub 5.5% by mid-2009 and mortgages at 7% or lower this is likely to cushion and substantial falls in rental properties as bank deposit rates are likely to be at around 4.5% so with cap rates at 8% gross. I'm happy to sit on my rental properties!
NZers will be more inclined to invest in rental properties than the sharemarket as we know from past experiences!
The main problem with USA & the UK is they have non-recourse loans which has caused a huge problem for their financial systems as people just walk away from their homes by giving back the keys ....
On 4 November 2008 at 12:57 am Nemydom said:
A house in the Auckland region declined by 7% over the past year. If I buy house for $400k today, it will be no more than $372k in one year anyway. I am loosing at least $28k. It is less than I can get from renting it out for $400 a week, which is approximately $21k. No, thanks!
Unfortunately, 7% is the most optimistic forecast. Nobody knows how far down it will fall in the nearest future. The property in this country enormously overpriced.
On 4 November 2008 at 12:59 am Nemydom said:
A house in the Auckland region declined by 7% over the past year. If I buy house for $400k today, it will be no more than $372k in one year anyway. I am loosing at least $28k. It is more than I can get from renting it out for $400 a week, which is approximately $21k. No, thanks!
Unfortunately, 7% is the most optimistic forecast. Nobody knows how far down it will fall in the nearest future. The property in this country enormously overpriced.
On 18 November 2008 at 2:02 pm Tom Pyatt said:
Owning rental properties with well structured debt and positive cashflows is a much better investment than money in the sharemarket. Whilst property values may have fallen you don,t lose anything if you don,t have to sell. Also rents have been going up improving your return and allowing you to pay debt down quicker, placing you in a better position for when the market turns and it is time to buy again. Commenting is closed
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