Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on rents rising at their slowest rate in 25 years

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Jenee Tibshraeny: NZ Herald Wellington business editor on rents rising at their slowest rate in 25 years · Best of Business

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  Speaker 2: Got some good news for you. Rents have risen at
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  Speaker 2: the slowest rate in twenty five years. Stats New Zealand
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  Speaker 2: says they increased point five percent zero point five percent
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  Speaker 2: between the June twenty five and June twenty six quarters,
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  Speaker 2: which is basically a trend that we've seen since the
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  Speaker 2: end of twenty twenty four. The Herald's Wellington Business editor
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  Speaker 2: Generative trainees across this and is with us I Jena
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  Speaker 2: hi Heaver. What's driving this really slow rent increase?
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  Speaker 3: Well, according to Cotality chief economist Calvin Davidson, he reckons
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  Speaker 3: it's just good old classic supply and demand. So the
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  Speaker 3: supply of rentals has gone up in recent years. Meanwhile
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  Speaker 3: demand has gone down. He thinks that's largely because immigration
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  Speaker 3: has been weak. So, you know, so basically more houses,
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  Speaker 3: fewer people wanting the houses. Now. You know, there've been
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  Speaker 3: so many different changes in the property landscape recently, if
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  Speaker 3: you think of how interest rates have fluctuated dramatically, we've
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  Speaker 3: had since the COVID period, different changes in LVR rules
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  Speaker 3: from the Reserve bank and changes of government with in
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  Speaker 3: terms of you know, being able to no longer deduct
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  Speaker 3: interest as an expense when paying tax, and now you
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  Speaker 3: can do that again. So we've got all this sort
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  Speaker 3: of noise in the background. That's all influencing influencing the
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  Speaker 3: property market. But Calvin Davison reckons it's good old supply
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  Speaker 3: and demand. So in his view, if if people say, look,
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  Speaker 3: if if costs that landlords face, if they go up,
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  Speaker 3: rent rent is going to go up, he thinks that's
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  Speaker 3: not quite true because you know, even if if a
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  Speaker 3: landlord's costs have gone up, they can only rent out
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  Speaker 3: a house affairs demand. So that kind of puts to
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  Speaker 3: bed some of the debate around some of these policy changes.
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  Speaker 3: Because of course, at the moment, landlords don't have a
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  Speaker 3: great time rarely either with those council rates being high,
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  Speaker 3: insurance is still pretty high, and interest rates aren't super
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  Speaker 3: low either, so you know, it's not a great time
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  Speaker 3: for a landlord either.
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  Speaker 2: No, do you think that it will continue this trend?
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  Speaker 3: Well, according to Calvin Davidson and also Tony Alexander, they
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  Speaker 3: reckon things have kind of bottomed out and if you
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  Speaker 3: look at some of the surveys that Tony Alexander has
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  Speaker 3: done of property owners, there has been a bit of
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  Speaker 3: a shift. So you know, for example, in terms of
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  Speaker 3: the portions of landlords who think they can increase rent
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  Speaker 3: in the portions who say they're struggling to get tenants,
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  Speaker 3: that is starting to shift. So it's becoming a bit
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  Speaker 3: more kind of landlord friendly, but not at any great rate.
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  Speaker 3: And I think, you know, we're really seeing that in
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  Speaker 3: the property market as well. Things may be atturning a corner,
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  Speaker 3: but hardly, hardly much. I think that the property investors
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  Speaker 3: will be worried if there's a change of government. The
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  Speaker 3: capital gains tax is the one that gets a lot
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  Speaker 3: of a ten but really, if property investors can no
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  Speaker 3: longer deduct interest as an expense, that's a big one
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  Speaker 3: that affects cash flow.
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  Speaker 2: Have we got an answer from labor on that.
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  Speaker 3: No, we don't, And I keep asking them because I
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  Speaker 3: think that's a huge policy that would affect cash flow.
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  Speaker 3: And you could argue that if it's so unattractive to
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  Speaker 3: become a property investor, you know, you could have fewer
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  Speaker 3: rentals on the market, which could then put rents up.
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  Speaker 3: That way, that's one argument you could make I wouldn't
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  Speaker 3: you carry on, I wouldn't be surprised if labor prevented
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  Speaker 3: interest deductions, but not entirely, more like fifty percent. So
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  Speaker 3: they said you could deduct some of your interests, but
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  Speaker 3: not all of it.
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  Speaker 2: That's so, why are they not being forth you know,
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  Speaker 2: forthright about it right now? Is it because they're saving
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  Speaker 2: this up for later or are they just not sure themselves.
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  Speaker 3: That's a good question, and I don't know the answer
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  Speaker 3: to that. Yeah, it's a yeah, it's a good question.
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  Speaker 3: I think that'll be huge news because if you are
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  Speaker 3: worried about a capital gains tax, you know that that
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  Speaker 3: tax is only on the gain, but with interest deductibility.
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  Speaker 3: If you know, if you are a landlord and you
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  Speaker 3: have high expenses every month and then you can't deduct
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  Speaker 3: the interest as an expense every year, that does make you, know,
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  Speaker 3: being in that position quite a lot harder. You know,
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  Speaker 3: you really need capital gains or something to make that
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  Speaker 3: an attractive investment. At that point, you need something, you.
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  Speaker 2: Know, Thank you very much, make appreciate it, you know.
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  Speaker 2: Tips Rainie, the Herald's Wellington Business editor.
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