The factors influencing the rental market during COVID-19 differ widely from region to region. If there was any hope of a “normalization”, then the new lockdown in August has placed another delay on things.
With many residents returning to New Zealand from overseas, the expectation was that there was a shortage of rental properties. This however was offset by fewer international students looking to rent and many landlords choosing to move away from short-term rentals like AirBNB to long-term rentals. Perhaps fortuitously, that provided the much needed furnished accommodation to those returning from overseas.
With tourists gone, the tourist areas now have an oversupply of rental properties, while Auckland likely sees a shortage.
“Areas like central Christchurch, where landlords had converted many properties to Airbnb residences, could experience of glut of rental properties available and she expected to see the number of properties being sold lift. Rents would also be under pressure.” (Stuff Business 10 April 2020)
Based on that, Queenstown has seen the biggest rent reductions in seven years (Herald 17 August 2020).
Until firm statistics on the number of rentals available and the number of tenants looking for accommodation will become available, any will speculation is difficult.
Not surprising, in times of uncertainty is that both landlords and tenants are playing things safe. According to Head of Trade Me Property Nigel Jeffries: “Understandably, prospective tenants backed away and demand dropped right off while people hunkered down and stayed at home.”
While activity started to loosen up when New Zealand went back to Level 1, caution, backed by the government’s legislation of rent freezes, is still the overriding mood. With the second round of lockdown in August, this is likely to remain.
Generally, landlords are used to play the long game and current conditions have inflicted another round of “patience” to the investment strategies. The best advice on planning for the future or identifying risks within your portfolio will come from your property management company since they sit at the forefront of gauging trends. That, and of course getting proper financial advice for your particular situation.
For most businesses the way of engaging with clients has changed and early adopters are in a position of advantage. This is no different for landlords. While the churn in tenancies has slowed, it is still a good opportunity to look at the way that you are operating. With some creative thinking, the “Safety First” approach can be executed without compromising service levels or compliance requirements.
At Metro NZ we have quickly adapted to the new conditions. Please feel free to contact us for advice.