It looks as if it’s all going to be up in 2020 – rising values, rising rents and a continuing rise in regulatory restrictions on the investment property.
Demands and expectations on landlords have increased dramatically over the past five years. The latest change is a reform of the Residential Tenancies Act, which will, among other things, limit rent rises to once a year, allow tenants to add minor fittings and provide specific reasons to end a periodic tenancy. This reform comes on the back of all the other changes that have added to landlords’ responsibilities and obligations.
The result? Some landlords have left the market and it’s much tougher for new investors to get started. That means there’s a general shortage of rentals in New Zealand, despite our increasing population and strong economy.
With more people and fewer rentals, plus increased costs, it’s unsurprising that rents are generally on the rise, particularly in the regions. Auckland’s rents haven’t risen this year, but are likely to nudge up slightly in 2020. Values in Auckland have also been subdued, although commentators feel the market may have turned a corner, with Westpac forecasting a 7% price rise next year.
The OCR remains on hold at 1%, so money is still extremely cheap. Banks have also eased up on their serviceability calculations, which might make it possible for more first-home buyers and investors to buy.
After two or even three years of a relatively stagnant Auckland market, it looks as if 2020 will be the year that things change; we’ll keep you updated!