Listings support PI’s exit

Listings are showing seasonal declines that are now quite extreme over a very short time. Nationally, listings have moved from a March 2021 peak of supply (greatest peak in 5 years) to a trough in June, that is a big seasonal change.

Aucklandsupply is easily the most extreme, it was a long way above the seasonal trough we normally see in February, but that dissipated quickly and is now exactly the same as last year

AK Seasonal

Seasonal Trend for Auckland Inventory

My interpretation: Auckland has built too many apartments, I have been calling out the oversupply for years, with prices falling over the last couple of years as a result. However, the changes in the market have bought an opportunity for PIs to exit and keep their shirts on, while removing low quality tenants before they cannot. This is demonstrated by a sharp reduction in Bonds as well as a sharp reduction in inventory.

The reduction in Inventory is showing in all the major cities, excluding Hamilton. Careful when comparing Wellington, there is strong seasonal demand, I am referring to the changes on a seasonal basis, here is the same chart as above for Wellington:

The ownership market is clearly in a bubble, the Private Rental market is in drastic change, what that will mean is your guess, not mine. Anecdotally, since we have a property up for rent, we are getting applicants coming from properties being sold. Many failed our checks, suggesting PI’s dumping and running where they have a poor tenant and before it gets messy. That scenario fits the data.

Care needs to be taken to understand the market. This is information to assist you, not to guide you.

Jonette 2011