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Thousands Of Investors Set To Sell

The government’s intention to bring the bright-line test back in July is expected to result in a wave of investor selling.

By: Sally Lindsay

1 March 2024

Investors are bringing more properties to the market.

In the latest Tony Alexander/NZHL Property Report, 14 per cent of real estate agents say investors are bringing them more properties to sell.

This is the highest reading on record and Alexander says despite the coalition government reinstating tax deductibility to 100 per cent next year, many investors “are of a mind to reduce their presence in the rental sector”.

The government’s intention to bring the bright-line test back from 10 years to two years in July is expected to result in a wave of investor selling – perhaps tens of thousands of properties.

When the bright-line changes in July, about 250,000 properties will be outside the test. Not all of these will be investorowned properties. Perhaps 75,000-100,000 will fall into this category. Not all of these will come on to the market, but property pundits are picking 1-10 per cent will as investors struggle with cashflow and are chomping at the bit to sell. That will make a big dent in the supply of rentals.

The Buyers

However, agents are noticing more investors in the market to buy. It was not until the end of September that more agents said they were seeing more investors. Since then, investors have retained their stand, but they are still not that positive as they remain constrained by sharp cost increases.

For those investors who are looking to buy, their main motivation is the hope of finding a bargain. There was a list of expectations of price rises over the September quarter, but that gain has now steadied. Interest rates are still too high to act as a buying motivator – in contrast to 2020.

The main concern of all buyers is access to finance, interest rates and not enough listings. Concerns about the availability of finance have remained steady.

Credit remains hard to get for many people and is the cause of many deals falling over, according to agents.

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