All the talk about shortages coupled with recent changes announced by the Government, many of which looked like they would impact on investors prompted one reporter to ask us a series of questions. We were surprised by our answers.
What is the current demand like for residential rentals in Christchurch?
The market demand is steady and similar to this time of the year historically.
What are your observations of the market in Christchurch over the past year? Have there been any major changes or shifts?
Things started slowly then built up prior to and immediately after Christmas with demand from both owners and tenants.
If so, what may be causing these changes?
Steady inflow of populations into Christchurch. More affordable housing costs.
Are you seeing investors ‘dip out’ of the market?
Have seen very little by way of decline. At our office we have only had one owner suggest that they may be thinking of selling as a result of law changes. One owner is selling due to age but nothing related to the changes. We have certainly seen a big jump in interest from investors located outside of Christchurch.
If people are selling are these properties o go to first home buyers?
To date we have had no owners sell but asking around realtor contacts there are signs of first home buyers but they do not dominate the market.
Has there been a shift in property investors moving from self-management to using professional property managers?
There has been a regular shift over recent years far pre-dating the recent law changes. Constant changes to the Residential Tenancy laws, delays with the Tenancy Services Tribunal, a greater need for record keeping, photographs etc has seen experienced self-managers move across. It has always been our contention that investors should use professionals – property rentals are a business not a hobby. Owners who self-manage are often not fully up to speed with current legal requirements but more importantly often fail to place a value on their own time. To save what? – around $40 per week on an average rental.
Do you anticipate this to grow?
For the reasons outlined above – yes.
Have you noticed a change in investors attitudes following the recent new legislation?
Short answer is no in as much as there has been little indication of a ‘mass sell-off’ of rental properties as predicted by many analysts and the media. Of course, we wouldn’t know if the changes have stopped investors from expanding their portfolios. Realtors tell us that investors are missing from the market place since the announcements were made.
What would your advice be to existing owners / investors unsettled by the numerous changes?
Stick with it. In reality the recent changes may mean very little to them. Not being able to deduct interest charges mean nothing if the property is mortgage free and even those carrying a mortgage the amount lost through the change is more than offset by the continuing increase in property values. There will always be a demand for quality rental properties.
What would your advice be to first time investors wanting to get a foot on the ladder?
Go ahead. Do your homework. Buy the right house, in the right neighbourhood at the right price. Seek professional guidance from property managers, financiers, brokers, other investors. Do not overpay. Do not over borrow. Build into your economics an increase in interest rates – they are bound to come.
So not what people may have been anticipating. The verbal threats from the Property Investors federation and others predicting a mass sell -off, higher rents, shortages etc have not as yet eventuated. BUT read the market constantly as things could change quickly.