More landlords than ever thinking of selling

The number of investors who are likely to sell their properties has risen to a staggering  34.5% over the past two years, a new survey of landlords shows.

The survey taken last month by the New Zealand Property Investors Federation (NZPIF) shows in 2021 that number was just 21.22%.

At the other end of the scale, in 2021 the percentage of landlords who said they would not sell, or probably not sell, was at 58.1%. It is now at 44.2%.

NZPIF president Sue Harrison says comments within the survey indicate many indicate many landlords are coming close to selling all their properties and existing the industry all together.

“This is due to increasing costs that are not being covered by rents received and also to the way landlord have been negatively targeted by the Government.”

The latest Tony Alexander and Crockers investor survey shows a record 82% of landlords say they are aiming to raise rents this year. However 35% will only raise rents by 5%, although the average desire is 5.6%.

Harrison says the majority of mum and dad landlords have debt with their rental properties. “With higher interest rates and a new tax which eliminates their ability to deduct mortgage interest payments against income, many are telling us they will struggle to keep their heads above water and will sell up.”

Recent CoreLogic data shows more than 50% of an average income earner’s pay goes to servicing a mortgage on an average priced property, assuming an 80% deposit. 

Rental yields have also been steadily dropping and for a lot of properties are now in the 2%-3% range. The few investor buyers still in the market, instead of relying on large capital gains, are now chasing cashflow positive properties, but they are difficult to find and becoming increasingly scarce.   

Harrison says if a large number of landlords do sell it will skew the market even further.  It will leave a big gap to fill with mass housing, which won’t suit many renters. The market will get badly out of balance.”

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