Amid ongoing challenges from the pandemic and global inflation, New Zealand’s economy is experiencing rising employment rate and an increasing cost of living. These economic shifts are impacting landlords, who must adapt to the changing rental market landscape. Here’s a breakdown of key factors affecting landlords and some strategies to navigate the economic downturn.
The Impact of Slowing Economic Growth on Rental Properties
As economic growth slows, employment rates and household incomes come under pressure, reducing tenants' disposable income. Many tenants may struggle to afford current rental prices, and landlords could face extended vacancy periods. To counter this, landlords might consider attracting long-term tenants by offering competitive rental prices or temporarily pausing rent increases for reliable tenants. This approach can help maintain stable occupancy during challenging times.
Increased Housing Supply
Government initiatives to boost housing have led to an influx of rental properties in the market, potentially lowering rent prices in certain areas. To remain competitive, landlords might consider minor property upgrades or targeting specific tenant groups, such as families or professionals, who may be willing to pay more for tailored features or amenities.
Evolving Tenant Preferences
Tenant priorities have shifted in the wake of the pandemic, with many now valuing properties that accommodate remote work or offer outdoor spaces. Where feasible, landlords could adapt properties to meet these preferences or offer flexible lease options to appeal to a wider range of tenants.
Navigating the Current Economy
Adapting to economic challenges means being flexible with cost management while keeping properties attractive to tenants. By staying proactive, adhering to regulatory requirements, and making strategic property improvements, landlords can work to maintain consistent rental income during New Zealand’s uncertain economic climate.
