ANALYSIS: It can be hard to get a feel for what is happening in the rental market and usually it is only landlords with a property to let or those searching for one to occupy who really know what is going on in their locale.

Each month I attempt to get a broad yet still imperfect feel for how things are tracking by surveying a large group of existing property investors to see what they are experiencing and perhaps planning to do. This survey, sponsored by Crockers Property Management, has in its first iteration for 2025 shown that just 55% of investors plan raising their rents in the next 12 months.

The average for this measure in the past four years has been 75% and this result is the weakest on record. Why? Partly because landlords are finding it hard to get a good tenant.

A year ago a net 22% of investors said it was easy to find a good renter. Now, a net 20% say it is hard, and this measure changed sharply in the middle of last year. Renters have more properties to choose from as many developers of townhouses have placed some of their properties into the rental pool rather than try and sell them into a market still wary of the flood of such properties, especially in Auckland.

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Also, rising unemployment and cost of living pressures will have been encouraging young people to delay leaving home, and the net migration inflows into New Zealand have decreased substantially this past year.

There are at least two things which have turned in investors’ favour, however. A net 6% say that their bank is willing to advance finance whereas a year ago a net 7% said they were not. And the proportion saying that interest rates are a key concern has decreased to just 5% from 12% a year ago.

But here is where things start to get interesting. By comparing latest readings with a year ago we don’t actually get insight into what is happening most recently. For instance, in October only 2% of investors said that interest rates were a concern. Optimism about the extent of easing monetary policy has decreased through summer.

House prices may not lift all that much this year, if recent figures are anything to go by. Photo / Fiona Goodall

Independent economist Tony Alexander: "Earlier optimism about the strength of the housing cycle upturn has backed off in recent months." Photo / Fiona Goodall

Also, whereas in October just 5% said that they were worried about house prices falling, now 8% say that this is a concern to them.

Earlier optimism about the strength of the housing cycle upturn has backed off in recent months amidst evidence that the economy is weaker than expected, new uncertainty about the global situation, worsening migration flows, and still rising costs for things like council rates, insurance, and maintenance in particular.

I use the results from this particular survey as one of many inputs into getting a feel for how the housing cycle is progressing. So far that progression is mild. Annual property turnover according to data from REINZ is up about 14% from a year ago, while prices are still down around 1% from late-2023 levels.

The monthly REINZ figures do suggest that prices are creeping upward – on average by 0.5% a month in the four months to November from -0.6% in the four months before that. But the month-to-month changes do not yet suggest that there is all that much strength in this upward leg of the housing cycle. With investors yet to make their presence felt and my suspicion that interest rate changes through 2025 will disappoint most borrowers, for the immediate future this upward move in the NZ housing cycle looks like being quite muted.

- Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz