What does a slowdown in Auckland’s property market mean for landlords? How much of a
slowdown is it and should I be worried? Read this now to find out!
Auckland’s real estate market slowdown continues, with a noticeable increase of properties being
passed in at auction. While house prices are still rising in the City of Sails, they are at the lowest rate
of the past five years. House sales in Auckland have also fallen more than a quarter, compared to the
past three years. Then there’s the data which shows loss making resales have reached 3.3%, possibly
demonstrating market fatigue. The question then is, what’s going to happen next with Auckland’s
real estate market?
Understanding Auckland’s Real Estate Market
Since the Reserve Bank’s restrictions on highly leveraged mortgage lending and property investor
purchases, house sales have been slowing in Auckland. Those with the cash and equity are still happy
to purchase, with others more reluctant. Buyers are no longer feeling a sense of urgency to purchase
and are instead taking their time. This has resulted in less competition between buyers to push
prices up and properties being passed in at auction.
ASB economist Kim Mundy said of Auckland’s real estate market, "Total listings continue to lift
higher, while new listings and sales remain subdued.” She believes it is a response to uncertainty in
the new government, plus the industry’s regulatory changes.
Westpac chief economist Dominick Stephens is not surprised at what is happening within the
Auckland property market. One of the reasons he gave in the Home Truths June newsletter is the
raising of the Bright Lines Test from two to five years. He also says that the restrictions placed on
foreign buyers will have a large impact within the Auckland region.
Impact on Auckland’s Real Estate Market Slowdown for Auckland Landlords
As a landlord, as well as the rental income, your property’s equity is also where profits come from. If
you purchased with the aim to hold for a few years, rent and then sell, you may lose money. You’re
also facing pressure to ensure your rental meets regulatory requirements and these come at a cost.
With minimum standards for heating and insulation being introduced, the ideal would be to pass
these costs on in your rent. Unfortunately, Auckland rents are dropping, and a rise can encourage
tenants to move, leaving you with a vacant rental.
If you’re concerned with the viability of your rental, let’s have a chat. As experienced property
managers, we can often suggest ways to help you make your rental more profitable and attract
better tenants. We also make owning a rental stress free with our property management service
too, so give us a call today.