Claims that property investors in Auckland have dried up is not true, according to Century 21 New Zealand
Property investors are still on the market but opportunists are fewer, according to Century 21 New Zealand.
The latest monthly QV House Price Index showed that residential property values in Auckland have increased by 1.0% in the past year, which resulted in claims that the Reserve Bank’s loan-to-value ratios (LVRs) had caused property investors to turn their attention towards the city fringes and buy rentals in areas such as Hawkes Bay, vacating Auckland in the process.
However, according to Century 21 national manager Geoff Barnett, these claims hold little weight.
“Claims that property investors in Auckland have all but dried up and have now turned their attention to the regions is by no means true,” says Barnett. “Yes, the LVRs slowed down some residential investors, but not the long-term ones where rentals are often their primary business. They are still out there in droves and can easily structure their business to meet any LVR requirements.”
Barnett says that the investors that have dried up are ‘opportunists’ who entered the Auckland market several years ago, following promises of large capital gains. Purchasing investment properties in Auckland is now less tempting given the 40% required deposit and levelled sale prices, so many of these investors have now turned their attention to other regions.
However, according to Barnett, losing these investors will help first home buyers to get onto the Auckland property ladder and will also benefit renters in the regions.
“When we saw a flurry of opportunist investors motivated by big capital gains and often very financially stretched to make it all work, the likes of property maintenance and tenant wellbeing were probably not their priority. Whereas long-term investors often make better landlords simply because they’re playing a much longer game.”
According to Century 21 New Zealand, property investors are an essential part of the market and are unfairly blamed for causing price increases and for dropping out when the market normalises. “Property investors are increasingly critical to the housing of more and more Aucklanders, and deserve a break,” says the Century 21 head.
