Auckland house prices are continuing to grow strongly on the back of record migration and low mortgage interest rates driven by a combination of unexpectedly low inflation and a bank war. While rents have not been growing at the same rate they are definitely increasing especially in South and West Auckland.
The market seems to be showing similar heat as it was prior to the introduction of the lending deposit restrictions and it looks imminent that the Reserve Bank will look to introduce another rule later this year in order to slow the market with Property Investors being in the gun this time around.
At Pedersens prior to the LVR rule introduction when funding was much more accessible we noticed that for a period in the winter months of 2013 that it was harder to get tenants as many were instead looking and able to purchase. Since the rule introduction this has definitely limited many would be purchasers thus increasing pressure on the rental market which has been one of the causes for rents to finally start rising.
The new rules are likely to increase funding costs for many if not all property investors over time and it remains to be seen if investors will try and pass these costs on in the form of increased rents. It may also reduce the supply of rental accommodation which could also result in an increase in rents with less stock being available.
All Landlords (and those planning to become one) should keep an eye on the potential proposals that are being suggested. At this stage it appears that the new rules will be in place by July.
It is a good opportunity for Landlords to see if there are areas where they an increase their rental returns through renovations and general improvements to their properties. If you’d like to discuss this further please contact us today on (09) 4763433 for a no obligation chat.