Silver lining for property managers

The deterioration to a net 43.9% of respondents who expect the economy to worsen, reflects further increases in petrol prices, along with weaker sales activity reported in most industries. Businesses are increasingly noting layoffs are needed and few expect positive surprises in the near future.

However, among the clouds of economic gloom, BNZ’s Tony Alexander reports some industries, including property management, have found a silver lining.

Although not all respondents in the property management sector were positive, several said business is looking good as property investors look away from selling towards renting.

One property manager on Auckland’s North Shore commented that the rental market had softened with rents still 5% above the last quarter.

“We are seeing more choice for tenants as houses that don’t sell go into the rental market. We have also noticed more landlords requesting that we manage their properties as they are concerned with occupancy now that there is no capital growth, so the number of weeks of tenancy becomes their major issue.”

There was a mixed response from property investors. One respondent noted some good bargains. Another said with property prices correcting slightly, vendors being more realistic and rents generally tracking upwards – the returns were looking better. But that was tempered with a comment about interest rates – and the hope of downward movement in the OCR later this year. Yet another landlord commented that while renting was OK, interest rates were taking away any profits.

Most of the residential real estate respondents in the survey agreed the market was extremely hard going – hard enough for some to walk away from the industry completely. Some noted bargains for investors, springing from vendors forced to sell.

A respondent in Auckland’s Eastern Suburbs said June was the toughest month, with the lowest volumes for both listings and sales so far.

Again, real estate agents reiterated the buyer versus seller standoff was seeing a number of sellers letting properties rather than selling at a reduced price. “In the meantime, the rental market appears to be getting a bit softer because of the increase in properties available.”

Another Eastern Suburbs real estate agent said their sales were ahead of this time last year and that the downturn was an opportunity to become a market leader. 

“We’re finding like we did in the last downturn, that when the going gets tough, the wisest sellers stick with the market leaders. The buyers follow. The reality is that real sellers are meeting the market. Others are languishing.”

The survey showed non-residential real estate is becoming tougher, especially in the retail and industrial markets.